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Subsidies

Many countries subsidize their fishing industries because of the important roles they play in the economy and food supply. Annual subsidies for fishing amount to about $26 billion world wide, only $7 billion of which goes towards fisheries management and the support of conservation. On the other hand, $16 billion is going towards the sponsorship of fishing fleets, thus encouraging the global fishing effort and increasing fishing capacity (Sumaila & Pauly, 2006).

Fishing subsidies come in many forms. Direct government payments to the industry reduce operating costs of fishing vessels in order to encourage fishing. Such assistance includes grants made for the purchase of new fishing vessels, vessel decommissioning payments (buybacks), fishermen's unemployment insurance, compensation for closed seasons, equity infusions, and price support programs (Schrank, 2003). When implemented by developed countries for their distant water fleets (DWF), they provide an advantage over the fishing boats of developing countries. Indirect financial assistance comes in the form of subsidizing shipbuilders and fish processors, credit and loan assistance, and tax reductions. Governments can also help their fishermen by imposing trade restrictions such as import tariffs, which ensures that prices for foreign fish are not lower than prices for domestic fish, and import quotas, which restricts the number of fish that can be imported.

Almost half of the subsidies issued in the world are granted by 38 different developed nations. The other half is accounted for by 103 developing countries. This disparity only increases the advantages fishing fleets of developed nations have over their developing world counterparts.

In France, construction subsidies are directed at DWFs catching tuna in the Indian Ocean with purse seines. Furthermore, the government sponsors the deflagging of its own ships so that the vessels can be recommissioned under the flags of other countries. Spain, too, offers up to a 55% construction subsidy and subsidizes joint ventures with Angola, Algeria, Argentina, the Falkland Islands, Morocco, Mauritania, Senegal, Namibia, and other countries in Africa and South America, mainly to catch shrimp. A one-third reduction in the Spanish fishing fleet is due to reflagging and recommissioning (MRAG, 2000). Vessel operators only pay about one third of the fees associated with obtaining a license and permit to fish in another country's waters. In offering these subsidies, countries are essentially encouraging the flag hopping that was discussed earlier. Furthermore, this increases the fishing capacity of countries that are already undercompensated; in 1996, Guinea Bissau only received 1% of the profits made from the tuna caught in its waters (Kura et al., 2006).

The U.S. and Canadian governments have also provided subsidies to promote domestic fishery development for many years. In addition, they have also used approximately $3 billion on income maintenance for unemployed fishermen and fish plant workers and to improve fishery science. Starting in the 1960s, most subsidies were intended to expand the fishing industry by, for example, helping fishermen buy boats and sell their catches at lower prices. Nevertheless, in the 1990s, when people started to realize the problem of overfishing, both countries began to subsidize the fishing industry with buyback programs to reduce the size of fishing fleets. Although these subsidies were introduced in response to the problem of overfishing, most subsidies in both countries are still intended to expand the fishing industry (Schrank, 2003).

Norway, one of the largest cod-catching countries, grants loans to its fishing industry to protect its domestic fish production. It also provides price support, insurance subsidies, operating subsidies, minimum income guarantees, vacation support and unemployment insurance, bait subsidies, gear subsidies and damage compensation (Schrank, 2003).

In view of the harmful nature of some subsidies, the World Trade Organization advised its members to restrict subsidies designed to promote exports and established controls over all other forms of subsidies. However, Japan and the United States, which are the main decision-makers of the World Trade Organization, endorse the "no-need approach" in which they propose no restriction of subsidies as they dispute the causal link between subsidies and overexploitation of fish resources. They suggest that poor fishery management, instead of subsidies, is the main cause of overfishing. Therefore, they propose that regulatory regimes including catch controls (quotas), effort controls (restrictions on boat size, engine power and days at sea, etc.) and right-based structures (permits, individual transferable quotas, etc.) should be implemented to improve fishery management. Therefore, it is difficult to internationally restrict fishing subsidies (Benitah, 2004).